Hollywood's 2025 Consolidation Amidst Talent Exodus and AI Integration

The Business · December 26, 2025 · Listen to Original Episode →

Original Title:

TL;DR

Hollywood's talent density is dissipating as below-the-line workers relocate to cheaper areas, driven by production fleeing California for better tax incentives and lower living costs.
The retreat from DEI initiatives in Hollywood, accelerated by the Trump administration, signifies a shift from stated inclusivity to prioritizing perceived business benefits and cost-saving measures.
Amazon's acquisition of MGM and the James Bond franchise demonstrates a strategic consolidation, forcing the Broccolis to cash out due to producer-studio impasses and the franchise's dated character.
David Ellison's acquisition of Paramount, despite his inexperience, represents a gamble on savvy individuals and fresh ideas to revitalize a moribund company, potentially leveraging assets like CBS News for political favor.
Netflix's acquisition of Warner Bros. signifies a major industry shift, potentially driven by a desire to evolve the theatrical window model and secure a position in a consolidating market.
Disney's partnership with OpenAI on AI-generated content signals a strategic pivot from copyright defense to embracing AI, acknowledging the inevitability of deals over prolonged legal battles.
The handling of Stephen Colbert's show cancellation and Jimmy Kimmel's temporary suspension suggests a pattern of concessions to political pressure, impacting broadcast decisions and potentially eroding public trust.

Deep Dive

Hollywood's 2025 was a year of profound disruption, marked by natural disasters, political pressure, and seismic industry shifts, culminating in a consolidation trend that threatens the traditional studio model. The year's events reveal a Hollywood struggling to retain its identity as an industry town, caught between the allure of tax incentives elsewhere and the erosion of its talent base, while simultaneously navigating a complex political landscape that impacts its internal diversity initiatives and corporate decision-making.

The year began with devastating wildfires, displacing industry professionals and fueling a narrative of California's declining desirability for production. This exodus is exacerbated by a competitive tax credit landscape, where California's reluctance to offer deductions on high star salaries puts it at a disadvantage against international locations. The critical mass of below-the-line talent is at risk of dissipating as productions increasingly favor cheaper locales, potentially transforming Los Angeles from an industry hub into primarily an executive base.

The political environment, particularly the shadow of the Trump administration, has had a tangible impact on Hollywood's internal dynamics. A noticeable retreat from Diversity, Equity, and Inclusion (DEI) initiatives is evident, with companies scrubbing explicit language from their messaging, a trend accelerated by political pressure but also influenced by earlier economic pullbacks. This political climate has also influenced corporate behavior, leading to significant financial settlements and content acquisitions seemingly aimed at currying favor, such as Amazon's $40 million documentary deal for Melania Trump and Paramount's various settlements. These actions suggest a pragmatic approach by some companies to navigate political pressures, prioritizing alignment with the administration over strict business logic for certain assets, like the influence of Barry Weiss's appointment at CBS News.

Consolidation is reshaping the industry's power structures. The protracted Skydance-Paramount deal exemplifies a "melting ice cube" scenario, where legacy assets are being absorbed. David Ellison's acquisition of Paramount, despite questions about his experience, signals a willingness to take risks on savvy individuals and new ideas, though the effectiveness of these bets, such as the Barry Weiss appointment, remains uncertain. Simultaneously, Netflix's surprise acquisition of Warner Bros. represents a dramatic shift, challenging established windows and potentially altering the theatrical model. This deal, driven by a need for content and a desire to evolve the business model, has sent shockwaves through the industry, even as some Warner Bros. employees view Netflix as a more stable employer than Paramount.

Finally, the rise of Artificial Intelligence (AI) presents a new existential challenge. Disney's partnership with OpenAI, allowing for the use of its characters in AI-generated content, signifies a move from defending copyrights to embracing the technology. This mirrors historical patterns seen with platforms like YouTube, where companies that fought AI ultimately faced weakened positions compared to those who made deals, suggesting a strategic pivot to secure a place at the table in an AI-dominated future.

Action Items

Audit Disney's AI copyright policy: Identify 3-5 specific instances where character likenesses are used by AI tools to assess potential infringement risks.
Track production cost migration: For 5-10 key below-the-line roles, measure the percentage of work shifting from Los Angeles to other locations annually.
Evaluate DEI program impact: For 3-5 DEI initiatives, measure retention rates and promotion of underrepresented groups against stated goals.
Analyze Paramount's news division strategy: Assess the correlation between Barry Weiss's leadership and audience engagement metrics for 2-3 key news programs.
Measure AI content generation impact: For 3-5 Disney characters, quantify the volume of AI-generated content using their likenesses to understand scale.

Key Quotes

"I mean we all we all know so many people in the industry that were displaced that lost everything both in the Palisades and in the Altadena area like these are people that fuel the industry and many of them are not coming back and this was the big moment of the year where people started to say is the tipping point here for when production has left and now people are leaving and what is Hollywood even going to be in five years?"

Matt Belloni highlights the devastating impact of the fires on industry professionals, suggesting it marked a potential tipping point for production leaving Los Angeles. Belloni points out that the displacement of these individuals, who are crucial to the industry's functioning, raises questions about Hollywood's future.

"I think the whole industry is morphing which we'll talk about and the herd is thinning in terms of the legacy studios and Hollywood is just kind of hanging on by its nails to being Hollywood."

Lucas Shaw observes that the entertainment industry is undergoing significant transformation, leading to a reduction in legacy studios. Shaw suggests that Hollywood's traditional identity is precarious, implying a struggle to maintain its status amidst these changes.

"I think that trump accelerated it but a lot of the stuff that trump has brought about is in this area is a little more cosmetic it's like taking stuff off your website I get that it's symbolic but it doesn't really matter what matters is are you promoting and hiring people of color women are you funding projects for them and I think some of that had already started to retreat."

Kim Masters argues that while Donald Trump may have accelerated a retreat in Diversity, Equity, and Inclusion (DEI) initiatives, the underlying issues predate his administration. Masters emphasizes that symbolic gestures like removing language from websites are less important than tangible actions such as promoting and hiring diverse individuals and funding their projects.

"40 million is an insane number and of course there's the brett ratner connecting to what we just talked about this guy who had been canceled who hasn't directed a movie in 10 years or more hercules was the last one hercules right in 2014 what company at this point hasn't in some way paid trump right we had disney settle the lawsuit we had paramount settle a lawsuit over the 60 minutes interview with kamala harris amazon buys the melania thing and paramount also agreed to make the rush hour 4 movie which again brings in brett ratner."

Matt Belloni points out the significant financial transactions involving figures connected to Donald Trump, such as the $40 million for a Melania Trump documentary and Brett Ratner's involvement in projects. Belloni lists several companies that have settled lawsuits or made deals related to Trump or his associates, questioning which companies have not engaged in such arrangements.

"So what do you do do you just not make bond movies or do you cash out say thank you and participate in the finances of them going forward I think making a bond movie at this point is very hard too like it's you know the james bond character is very dated I don't know they've done it before and amy pascal and david hayman are strong producers deenie villeneuve that's a coup the fact that they got him interested in doing a bond movie."

Lucas Shaw discusses the complex decision-making process behind the sale of the James Bond franchise to Amazon, considering the challenges of updating the dated character. Shaw suggests that the Broccoli family may have chosen to cash out due to frustrations with Amazon and the difficulty of making a contemporary Bond film.

"I think the the one thing I do appreciate about it is that he's trying something different and new as to where paramount has been I think it's a dicey game oh 100 and a bunch of these things are probably not going to work right I agree with you that the barry weiss decision very questionable but who cares yeah does david ellison care that the barry weiss stuff doesn't rate like does he care that a town hall doesn't match it just reminds me like when coca cola bought columbia pictures and there was all this noise around istar and nobody that wasn't even a rounding error for coca cola and they finally realized this we get a lot of bad publicity for this and controversy around this so let's get out and so to me if you say he well but this is david ellison's bet on his future his dad has unlimited money he does not at least as of yet have unlimited money but my point is cbs news is a tiny portion of the overall paramount ellison company so if they can use that to curry favor with the administration then who cares about the business."

Kim Masters acknowledges David Ellison's attempt to innovate at Paramount, despite the inherent risks and questionable decisions like the Barry Weiss appointment. Masters posits that Ellison, lacking his father's unlimited resources, is making a calculated bet on his future, and that the news division's potential to curry favor with the administration might outweigh its business performance.

Resources

External Resources

Books

"The Business" by Kim Masters - Mentioned as the podcast title and host.

Articles & Papers

"Megabanter 2025: Hollywood’s unraveling year of crises, consolidation, and AI" (The Business) - Episode title and subject of discussion.
"impressive entertaining and ambitious" (IndieWire) - Review of "The Boys" series.
"a deliriously entertaining masterpiece" (BBC) - Review of "No Other Choice".
"a dazzling masterwork from one of cinema's great filmmakers" (Next Best Picture) - Review of "No Other Choice".
"the best picture of the year" (The Wall Street Journal) - Review of a film starring Jake Gyllenhaal, George Clooney, and Adam Sandler.

People

Kim Masters - Host of "The Business" podcast.
Matt Belloni - Banter buddy and Puck partner, co-host of "The Business" Megabanter.
Lucas Shaw - Bloomberg's media and entertainment reporter, co-host of "The Business" Megabanter.
Donald Trump - Former US President, discussed in relation to Hollywood's political landscape and business dealings.
Melania Trump - Former First Lady, subject of a documentary.
Brett Ratner - Director, discussed in relation to past controversies and potential projects.
Kamala Harris - Vice President, mentioned in relation to a "60 Minutes" interview.
Jeff Bezos - Founder of Amazon, mentioned for Amazon's payment for a Melania Trump documentary.
Barbara Broccoli - Producer, discussed in relation to the James Bond franchise.
Michael Wilson - Producer, discussed in relation to the James Bond franchise.
Jen Salky - Former head of MGM, mentioned in relation to the James Bond franchise.
Amy Pascal - Producer, mentioned as a potential producer for a Bond movie.
David Hayman - Producer, mentioned as a potential producer for a Bond movie.
Denis Villeneuve - Director, mentioned as a potential director for a Bond movie.
Seth Meyers - Host of "Late Night with Seth Meyers", discussed in relation to NBC and Trump.
Stephen Colbert - Host of "The Late Show with Stephen Colbert", discussed in relation to his show's cancellation and politics.
Jimmy Kimmel - Host of "Jimmy Kimmel Live!", discussed in relation to a controversial bit and his show's suspension.
Ted Cruz - Politician, mentioned in relation to the First Amendment and Jimmy Kimmel's suspension.
George Stephanopoulos - Host, mentioned in relation to a lawsuit.
Sherry Redstone - Chairperson of Paramount Global, discussed in relation to the Skydance deal.
David Ellison - CEO of Skydance Media, discussed in relation to the Paramount deal and his business strategies.
Larry Ellison - Father of David Ellison, mentioned as a wealthy individual.
Barry Weiss - Journalist, appointed head of CBS News.
Erica Kirk - Mentioned in relation to a failed initiative at CBS News.
Scott Pelley - Anchor of "60 Minutes", mentioned regarding the impact of Barry Weiss's appointment.
David Zaslav - CEO of Warner Bros. Discovery, discussed in relation to the potential sale of Warner Bros. and his business strategies.
Richard Plepler - Former HBO CEO, mentioned for popularizing a specific style of dress.
Jake Gyllenhaal - Actor, nominated for awards.
George Clooney - Actor, nominated for awards.
Adam Sandler - Actor, nominated for awards.
Bob Iger - CEO of Disney, discussed in relation to AI and copyright.
Dana Walden - Insider at Disney, mentioned in relation to CEO succession.
Josh D'Amaro - Insider at Disney, mentioned in relation to CEO succession.
John Voight - Actor, mentioned in relation to a "Make Hollywood Great Again" initiative.

Organizations & Institutions

Prime Video - Sponsor of KCRW, presenting "The Boys".
KCRW - Public radio station, sponsor of "The Business" podcast.
Amazon - Company involved in various media deals, including a documentary about Melania Trump and the acquisition of MGM.
Warner Bros. - Studio discussed in relation to potential acquisition and its business strategies.
Netflix - Streaming service, discussed in relation to acquiring Warner Bros. and its business strategies.
Disney - Entertainment company, discussed in relation to DEI language, AI, and CEO succession.
OpenAI - AI research company, mentioned in relation to Disney's new deal.
Skydance - Production company, involved in the deal to acquire Paramount.
Paramount - Media company, discussed in relation to the Skydance deal and its business challenges.
MGM - Studio, acquired by Amazon, owner of the James Bond franchise.
Puck News - Media outlet, where Matt Belloni works.
Bloomberg - Media company, where Lucas Shaw works.
National Football League (NFL) - Professional American football league, mentioned in the context of data analysis.
Pro Football Focus (PFF) - Organization providing NFL analytics, mentioned as a data source.
New England Patriots - Professional football team, mentioned as an example team for performance analysis.
UK - Country mentioned for its tax breaks for film production.
European Union - Political and economic union, mentioned in relation to concerns about theaters.
French - Nationality, mentioned in relation to concerns about theaters.
Washington - Referring to the US government or political influence.
CBS News - News division, discussed in relation to its leadership and business strategies.
NBC - Television network, discussed in relation to its programming and political pressures.
Saturday Night Live (SNL) - Sketch comedy show, discussed in relation to NBC and political pressures.
MSNBC - News channel, discussed in relation to Comcast.
Comcast - Media company, discussed in relation to NBC and its business decisions.
South Park - Animated series, discussed in relation to its creators and political commentary.
The Ellisons - Family involved in media ownership, discussed in relation to Paramount and other ventures.
Disney - Entertainment company, discussed in relation to DEI language, AI, and CEO succession.
Viacom - Media company, mentioned in relation to a lawsuit against YouTube.
YouTube - Video-sharing platform, mentioned in relation to copyright and deals with media companies.
Academy - Referring to the Academy of Motion Picture Arts and Sciences, mentioned in relation to the Oscars.

Tools & Software

Sora - AI tool, mentioned in relation to Disney characters.
ChatGPT - AI chatbot, mentioned in relation to Disney and AI.

Websites & Online Resources

consider amazon com - Website mentioned for awards eligibility.
kcrw.com - Website for KCRW.
App Store - Platform for downloading apps.

Podcasts & Audio

The Business - Podcast name.
The World of The Boys - Series mentioned by Prime Video.
60 Minutes - News program, mentioned in relation to a lawsuit and interview.

Other Resources

DEI (Diversity, Equity, and Inclusion) - Initiative discussed in relation to Hollywood's response to political pressure.
AI (Artificial Intelligence) - Technology discussed in relation to its impact on Hollywood.
James Bond - Film franchise, discussed in relation to its sale and future.
First Amendment - Constitutional right, discussed in relation to freedom of speech and political commentary.
Popcorn - Mentioned in relation to Tom Cruise's enjoyment of movies.
Copyright - Legal concept, discussed in relation to Disney and AI.
The Boys - Series, mentioned as awards eligible.
No Other Choice - Film, mentioned with critical praise.
The Oscars - Awards ceremony, mentioned in relation to future discussions.